Michel Bauwens: Commons and Blockchain

Michel Bauwens, founder of P2P Foundation, had a fireside chat in the Commons Foundation
Korea office on Oct 2. Titled “Blockchain and commons, the connecting
link” the discussion focused mostly on the origin of commons and the
open source movement.

Michel Bauwens interview in Germany during the meetup of PlatformCoop-Berlin

Below a partial summary of the lecture. For the last decade the Belgian
activist has been researching how open source communities work and
function. Market economies and capitalism are fundamentally based on the
double entry ledger accounting, separation of capital and labor,
private corporations, financing as well as technological breakthroughs
from steam engine to internet. Open source communities are
permissionless aggregations of people working on common projects, based
not on commodity or labor, but based on contributions to create shared
resources. These free aggregations around mutualized resources have no
command hierarchy, but only a control hierarchy (i.e. there are
gatekeepers, often called ‘maintainers’, who protect the integrity of
the ecosystem). Open source communities are more inclusive, but also
more competitive at the same time. When innovation becomes collective,
they can outcompete isolated private companies, having more global and
broader base of contributors than any single R&D department, no
matter how big the company: e.g. Wikipedia is an open source
encyclopedia that can not easily be replicated by private enterprises,
nor even by the state. Commons are shared resources, managed by
stakeholders or the communities of contributors in peer to peer (P2P)
networks and governed by the norms and rules of the communities they
serve. Primary ways people interacted through history were commons as in
clans and tribes of the premodern collectivism era and later with
corporative guilds in twelfth century Europe. According to Mr Bauwens
capitalism deprived commons of natural resources: for example the common
land in agriculture has seen its spaces appropriated through private
property, while the excess number of landless farmers were forced to
migrate and develop the industrial cities. There are four phases or
types of commons: natural resources, social, open knowledge and urban
commons. The latter are recently increasing exponentially in mobility,
housing, food and energy projects to such an extent they are present in
nearly every provisioning system where citizens can now choose between
private, public and commons options. For example, in mobility there are
private cars, public transportation but also shared transportation
systems such as nonprofit or cooperative car-sharing; similarly for
housing there are privately owned houses, public housing but also social
or cooperative housing. When and where markets and states fail, civic
associations are created to cope and this is what happened after the
crisis of 2008, when urban commons started mushrooming. Urban commons
are not generally producing but usually only redistributive initiatives,
for example car sharing solutions redistribute mobility, but do not yet
make cars. However food and energy commons are the two exceptions:
organic agricultural commons do not split between consumption and
production, but use commonly managed ecosystems, while renewable energy
localize energy production closest to where consumption is needed.
“Cosmo-local” production system can be simplified as follows:
“everything light is shared and global, everything heavy is local” says
Mr Bauwens. In this model, there is a convergence of social commons with
the distributed manufacturing systems, that are currently coming online
with the new technologies around 3D printing and which is distinct from
the protectionist economic agenda of the Trump administration to
repatriate manufacturing factories back to the US. In the cosmo-local
model, intellectual property (IP) is globally shared in global open
design communities.

Bettina Warburg, How the blockchain will radically transform the economy — TED 2016

“What do you need to do to scale this system globally?” Open source already means the cooperation and coordination of immaterial production at global scale, but in order to shift this model to physical production, it is necessary a particular kind of knowledge intermediation, i.e. accounting, and this is where the blockchain revolution comes in, by making possible global open and shared distributed ledgers where every transaction for physical goods can be verified. Accounting is at the core of civilization as it created the state system (the first writing found where ledgers in the Temple states of Sumer), while double entry book accounting, invented by Luca Pacioli, a Franciscan monk in 15th century Venice, sees the world in terms of the growth and accumulation of private assets, making possible the development of capitalism. Blockchain in this respect can be seen as making possible new forms of digital accounting that consist of ‘post-double-entry’ bookkeeping, namely: 1) open and contributive accounting (such as practiced by the Canadian Sensorica project), 2) REA (resource event action) ecosystem accounting, which let us see flows in shared circular economies involving multiple players and 3) biocapacity accounting, which is based on direct vision of the flows of matter and energy and therefore not only financially driven. Open shared ledgers are a key mutual coordination mechanism to shift open source coordination from software to manufacturing. This contributive accounting allows fairness, openness, transparency, security and environmental friendliness. All the necessary technologies and tools are already existing or in development, but are fragmented and not integrated yet. One P2P interoperable ledger for all could be scalable infinitely if it used the right distributed ledger technology. Asset based coins and mutual credit cryptocurrencies are necessary, since they link directly to natural resources and human labor, while purely supply-demand driven digital assets are mostly speculative and do not give a view of the real world.

Don Tapscott, How the blockchain is changing money and business — TED 2016

“How do we reward for these structured regenerative activities?” Capitalism rewards only extractive activities without consideration for externalities (in Microeconomics courses externalities are studied as cases of market failures). In welfare state model the state is outside the capitalist model, in a market model the role of the state is weakened even further. One solution could be to internalize externalities directly in the production system. Mr Bauwens mentions that a study on the top forty companies in France revealed that none of them would be profitable, if they internalized pollution costs. As an example of a potential alternative methodology to fund regenerative activities in a systematic way, Mr Bauwens mentioned the Regen Network, which proposes the concept of an “ecological state protocol”, verifying the state of an ecological resource, lodging it on the blockchain and tokenizing that value creation. For example, organic farming results in less polluted water, with water agencies saving millions of Euro, but these environmental benefits cannot be rewarded in the present system. There is a need for structured funding of regenerative work and activities, that minimize the human impact on the environment and reduce the use of limited natural resources. Market economies reward only values created within markets, redistributing them in the best case scenario, while other kind of values are ignored. Value creation should be centered around commons.

“What to do with the private sector?” Societies need to establish new economies for the common good, which can be made explicit with new indicators and metrics [Economy for the Common Good (CG) has developed a full CG financial reporting with balance sheet and a whole new more ethical economic model]. Economies should serve communities as constitutions already mandate that the economy should serve the common good : e.g. corporations performing common good results could be entitled to pay less taxes. “In France the Napoleonic code established in 1804 did not recognize commons, allowing only public or private aggregations; in US, whose legal framework was developed later in time, regulations are even more purely market based” said Mr Bauwens.

Capitalism is in structural crisis amidst combined environmental problems and social tensions (increased income inequality and youth under/unemployment). Mr. Bauwens suggests that capitalist market economies should transform in ethical market economies, in which markets are embedded and society functions around commons: if the final goal of companies is to maximize value for stakeholders, the definition of value should not be restricted to profits, but include broader social and ecological impacts. States should also facilitate the transition to commons oriented sharing economies without commanding, but by incentivizing mutualization in a shared and contributed way. Non profit car sharing program require only one hundred cars for one thousand persons, ceteris paribus guaranteeing full mobility with only 20% of the ecological footprint.

“What to do with the liberated resources from automation and optimization?” Basic income could be an alternative, although commons economies can redeploy work forces in different sectors: e.g. organic farming requires 12% of workforce in the countryside, compared to the current 2% occupied in the agricultural sector. According to Mr Bauwens organic small sized farming is profitable or breaking even, while extensive industrial farming is losing money (he says in Europe industrial farmers would have negative incomes without European subsidies, a statement to be verified). “How to drive the transition from market centric to commons centered societies and economies?” To indicate the potential speed of change, Bauwens says that guilds in the twelfth century Europe were formed in the span of seventy years, for example in Ghent a progressive and innovative area in Belgium. Today digital nomads are spread around the world, collaborating in co-working spaces scattered globally: in Thailand (where Mr Bauwens lived extensively in Chiang Mai) there is a community of open source activists and software developers of the Mozilla Foundation for instance and many are already making a living through the token economy or bounties. This under the radar trend may transform from trans-local civic power to a transnational one, aiming to change entire metropolitan areas: redefining societies and economies in two hundred cities can have eventually a global impact. Mr. Bauwens is convinced that shared economies are scalable and replicable anywhere, leading to a broader social change. He stresses that commons are not utopia, commons are not necessarily ideally inclusive and the network status of individuals can be fluid, contentious and difficult: but even if they are not ideal, they are necessary to transition to new systems.

Michel Bauwens: Are We Shifting to a New Post-Capitalist Value Regime? — Berkman Center for Internet & Society at Harvard University.

The two hours, dense in unconventional and anticonformist concepts and ideas from different fields (anthropology, history, economics, finance, sociology and technology) provoked many questions in the participants, but time was limited and translation consumed more than half of the time available. However good discussions usually end with more open questions than definitive answers, in this respect the fireside chat with Mr Bauwens was very insightful and stimulating to maintain a sane skepticism about the future: to suspend judgement and keep on searching.

Article revised on Oct 9 by Michel Bauwens and Ann Marie Utratel to clarify some of the point of views expressed during the lecture and following Q&A discussions.

CURATED BY

Michel Bauwens

Michel Bauwens is the founder and president of the P2P Foundation and works in collaboration with a global group of researchers in the exploration of peer production, governance, and property. Bauwens travels extensively giving workshops and lectures on P2P and the Commons as emergent paradigms and the opportunities they present to move towards a post-capitalist world.
In the first semester of 2014, Bauwens was research director of the floksociety.org which produced the first integrated Commons Transition Plan for the government of Ecuador, in order to create policies for a 'social knowledge economy'.
In January 2015 CommonsTransition.org was launched. Commons Transition builds on the work of the FLOK Society and features newly revised and updated, non-region specific versions of these policy documents. Commons Transition aims toward a society of the Commons that would enable a more egalitarian, just, and environmentally stable world. He is a founding member of the Commons Strategies Group, with Silke Helfrich and David Bollier, who have organised major global conferences on the commons and economics.